DraftKings and Flutter shares slump on Illinois tax hike plans

Estimated read time 3 min read

Analysts warn floodgates could be open for further tax rises in other states as 40% top rate plans return to House for approval
The post DraftKings and Flutter shares slump on Illinois tax hike plans first appeared on EGR Intel.  

DraftKings and FanDuel parent company Flutter Entertainment suffered share price slips as lawmakers in Illinois took one step closer to bringing in a 40% top tax rate in the state.

Following the Memorial Day suspension of trading on Monday 27 June, DraftKings and Flutter took hits on Wall Street as investors reacted to the news coming out of the Prairie State.

The Senate approved a sliding tax scale on Sunday 26 June, with House Bill 4951 now heading back to the House for approval before ascension to Governor JB Pritzker to sign into law.

DraftKings saw its stock fall 10.3% by the close of play yesterday to $36.61 (£28.70) from its previous Friday close of $40.75.

For Flutter’s US shares, which are set to become the group’s primary listing before the end of May, the operator noted a 7.7% decline to $188.33 by the end of the day.

The duo’s stock market slumps come as the new sliding scale would see the two operators subject to the 40% top tax rate from 1 July in Illinois.

The new scale will see firms that post more than $200m in revenue annually for the state will be subject to a 40% GGR rate. Brackets for 20%, 25%, 30% and 35% have also been outlined in the bill.

As it stands, only DraftKings and FanDuel would cross this top threshold, with the Boston-based DraftKings reporting revenue of $421m in 2023 and FanDuel posting revenue of $350m for the same period.

PENN Entertainment also suffered a slip in its share price, down 5.8% to $15.10 on Tuesday, with the operator set to be included in the 20% tax bracket, should the measures come into effect.

MGM Resorts International, which holds a 50% stake in the BetMGM JV, saw its stock decline slightly by 1.86%.

However, fellow operators in the state were more fortunate on the public markets, including Rush Street Interactive, with the firm’s share price ticking up 1.4% on Tuesday 28 May.

Elsewhere, an analyst note from Citizens JMP Securities commenting on the planned tax hike said Illinois’ actions could see a swathe of states go down the same path.

The note read: “The last year has brought on a tax rate increase from Ohio, and now Illinois, with states including New Jersey and Massachusetts, flirting with the idea of increasing their respective rates. We find it interesting states are now turning back to tax rate adjustments for online gaming when tax changes have been non-existent in states with brick-and-mortar casino gaming.

“The floodgate is now open, in our view, whereby state legislators have found a way to increase tax revenue with little to no effort.

“The current wave of increasing the tax rate will create an overhang on the industry.”

The post DraftKings and Flutter shares slump on Illinois tax hike plans first appeared on EGR Intel.

 

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